Great post – trying to determine how much we do need to continue to live on is an interesting process; there are so many “what if”s and “maybe”s that it just makes my head spin.

Homeless people have the riches of time as well although I suppose they are limited in what they can do with that time.

I turned 35 in Feb and find myself probing larger questions as well. I not only am trying to balance what is right for myself, but also my wife, son and next child coming in < 2 weeks.

I read Felix Dennis’ book last summer. To be honest, it made me want to work less and not do the sacrifice thingy.

Beyond a certain point, money effectively becomes worthless to you because you can’t possibly spend it all.

It can make a huge difference to others though – I think if I made money beyond that point which I could spend it in my lifetime, I would see it as an opportunity to do great good in the world.

When I earn a lot of money,
$1,000,000, let us say,
I will be happy, that I will be,
but not for the money that comes my way.
Not the success that provided the money,
nor the stockpick that struck pure gold.
The time that I gain, true the wisdom amassed,
let’s me do what I want, ’till the day I’m too old.

Greetings,
Andy

Jacob, I could not agree with you more.

In the book The Happy Minimalist, the author Peter Lawrence apparently retired young.

He is not a billionaire but he proves that you don’t have to be one to be happy.

Although he acknowledges money can buy happiness, he also points out

a) Money can also buy sorrow

b) Money is the not the only thing that can bring us happiness

One interesting concept he introduced to me in the book, was about personal efficiency & upr (utility per resource).

You are efficient when you can squeeze the max satisfaction from a single resource (resource can be time, money etc).

So, if one can retire young, that is one indication of personal efficiency. Also, isn’t someone who can be happy with say half a million more efficient than someone who needs half a billion to be happy?

LOVE IT— Time is the only resource that is completely irreplaceable. Best, Barb

@jc – Good question. In terms of expenses, it’s the ability to live on far less than the average person but also on less relative to what I’m currently living on. In terms of income, it’s the ability to easily find a job to cover my living expenses. Part time at McDonalds would do it. Financially speaking, it’s a 30% buffer.

@Alex – I seriously consider the former two back stops much more important than the financial one. I’d say 33x although mine is presently higher. It also depends on when you retire relative to market performance. If you retire at a market peak, it needs to be higher than if relying on it at a market low. Remember, investment is not a precision science: Thirty-something would be the correct answer then.

Good to see that you’ve decided to dig into that book. 🙂 Did my recommendation in one of the earlier posts tip the book in your favour?

Like Ryan Martin says, I almost judged the book by its cover as well (title, socks, lions, his sozzled look… the full works!!). I happened to speedread and arrived at that very same paragraph you highlighted. Then I decided to get that book. As jaqjolie points out, it is more like the antidote book to “You too should be rich” books…. It appeals on many many layers… The rich on the title is a misnomer….. Felix wants to imply Rich in the sense of “the abundance of valuable resources or material possessions or the control of such assets”. Not JUST from a “net worth” point of view.

My suggestion to you…. Don’t give up on the book yet… You will have many similar takeaways like this post from the book.

Happy Reading.
Best,
Surio.
—

The amount an individual feels comfortable retiring with is so personal. It all depends on how and where you would like to live. I was recently looking into retirement overseas and realized what I would need to retire in Malaysia is substantial less than what I need in the US.

I have a question for the Jacob & the wonderful community here – I understand the retirement net worth goal of 25-33 times your projected annual expenses. What I need to figure is how to factor in my mortgage payment – which will be with me for another 10 years or so, but will then go away. How does one factor in a temporary annual expense like this when determining the net worth goal for retirement. Appreciate the help!

“But dost thou love life, then do not squander time, for that’s the stuff life is made of” – Benjamin Franklin

Interesting concept. It all boils down to financial freedom and how much expense you have. Societies places more popularity among people who have greater expenses which is why freedom is becoming so hard for middle class people. Until there is a paradigm shift its going to be hard to change.

I recently reduced my work week from 40 hours per week to 32 hours by taking every Friday off; a 20% reduction in work hours as well as salary, but I retain full-time benefits. Every weekend is a wonderful 3-day weekend!

Anyone who unwittingly has enough to retire on right now but doesn’t believe they do, or possibly wants more. Is sacrificing time

My suggestion is: Go to SE Asia (Yes, Vietnam, Bali Indonesia, Cambodia, Bangkok) and see how the masses of people live over there. You’ll never meet a happier bunch of people. How much do most of these people have? Nothing. Thats right, they sleep in their 4sq metre shop. All 5 of them. They don’t particularly need doors, or windows. Everything they need is right there.

Since discovering the world and beginning to see how the majority of the world live I’ve become richer than my wildest dreams. I learned that I am already within the top 99.5% of the worlds wealthiest people and that this can never buy me happiness. It can only help

I don’t have the 30x living expenses as cash most extremer’s (not to mention normal retirement planners..) recommend. I have a modest $1.2M in mostly borrowed funds in investments that grow at a std 7% rate and give me $8,500 a year in income. I live on saved cash from my previous jobs and very little personal debt or expenses. The Wife & I head back to SE Asia in a few weeks to enjoy the experience once again because this makes us happy.

I’m semi-retired, but feel very fortunate because I didn’t need the massive cash that even many ERE’ use. I have the investments and most importantly. TIME. Time for the investments to compound before we go using any of the funds. This is what allows us freedom. I stick to the 4% rule once I ever start withdrawing funds. These funds (from property in Australia) are not taxable if withdrawn as equity. And they are only taxed at a maximum of 23% if liquidated but more likely much less than that rate because of the 50%CGT rule.

Much easier than using fully taxed wages to aquire wealth. Not to mention the time we save. If we make 7%p/a on 1.2M ($84,000) thats as much as the Wife & I earn working an entire year after taxes. I’m not doing that! Why? Because we simply don’t need to.

Hey Jacob-

I have 2 questions/comments I would appreciate your feedback on.

1. When people find something they are truly passionate about, it often is the case that “work” doesn’t really feel like work. I often wonder about all the CEO’s, business owners, etc who have more than enough money to retire but continue to work (Warren Buffet…). My dad is 65 and is a small business owner and could retire but wants to keep working because he is very passionate about what he does and thinks he will be “bored” having “nothing” to do all day. Do you ever think about this and specifically why successful people often choose to continue to work?

2. If you retire in your 30’s and there is a severe market downturn, high inflation or other possible unexpected issues, are you not worried that your savings will not be able to support you going forward? I know you can “always go back to work”, but if you haven’t worked for 10-15 years…that isn’t necessarily attractive to potential employers. My question is, someone retired with “modest” savings in their 30’s may be okay today, but how do you not worry about the future?

Thanks,

David